Ashmore Group plc · LSE:ASHM
Ashmore — FY2019 Earnings Presentation
29 slides from Ashmore's earnings presentation, Sep 6, 2019
Slide 1: Ashmore Group plc Results for 12 months ending 30 June 2019
Ashmore Group plc Results for 12 months ending 30 June 2019 6 September 2019 www.ashmoregroup.com
Slide 2: Overview
Overview • Strong operating and financial performance ˗ Active management delivers outperformance: >90% AuM outperforming over one, three & five years ˗ AuM increased 24% YoY, driven by broad-based net inflows of US$10.7 billion ˗ Net management fee income +17% ˗ Adjusted EBITDA +10%, margin maintai
Slide 3: Strategy delivering diversified AuM growth
Strategy focused on Emerging Markets growth opportunity Significant allocation opportunities (Phase 1) Intermediary retail AuM • Developed world has US$80trn wealth; every 1% increase in EM 16 allocations is a significant AuM opportunity 14 • Long term: EM target allocations <10% versus 15% (equitie
Slide 4: Active investment processes delivering strong outperformance
Investment performance AuM outperforming versus benchmark, AuM outperforming versus benchmark, AuM outperforming versus benchmark, gross one year annualised gross three years annualised gross five years annualised 100% 100% 100% 97% 97% 90% 80% 80% 80% 60% 60% 60% 40% 40% 40% 20% 20% 20% 0% 0% 0% Bl
Slide 5: Financial performance overview
Financial performance overview • AuM +24% YoY, average AuM +16% YoY FY2018/19 FY2017/18 £m £m YoY % Net flows +US$10.7 billion and positive investment performance of +US$6.9 billion AuM (US$bn) 91.8 73.9 24 Adjusted net revenue 308.1 278.3 11 • Adjusted net revenue +11% Net management fees +17%
Slide 6: Strong and broad-based AuM growth driven by net inflows
Assets under management • Gross subscriptions of US$23.7 billion, 32% of AuM development (US$bn) opening AuM (FY2017/18: US$30.0 billion, 51%) 23.7 (13.0) Existing clients continue to make progress 6.9 0.3 towards target EM weights New clients active in local currency, blended debt, equities and
Slide 7: Revenue growth driven by diversified management fee income
Financial results Revenues • Net management fees +17% with +16% average AuM Strong growth (+17%) in net management fee income growth 3% YoY benefit from lower average GBP:USD rate 8.7 294.3 40.1 7.5 5.0 2.5 • Net management fee margin 48bps, -1bp YoY 250.5 +1bp benefit from investment theme and
Slide 8: Operating cost discipline continues
Financial results Operating costs • Like-for-like non-VC operating costs +3% Operating cost development (£m) ˗ Primarily FX translation with weaker Sterling 1.2 0.1 54.8 2.8 ˗ Continued focus on efficiency offset incremental 50.7 costs of MiFID II and establishing Ireland office • Average headcount
Slide 9: Increased seed investments to deliver future AuM growth and diversification
Financial results Seed capital Seed capital movement (£m) • Total seed capital programme of £299.0 million 108.3 77.8 Market value £277.8 million (30 June 2018: £228.3 million) Undrawn commitments of £21.2 million 19.0 277.8 228.3 • Active management delivered realised gain of £2.4 million and t
Slide 10: Dividend cover at target level of 1.5x
Financial results Statutory earnings FY2018/19 FY2017/18 YoY £m £m % Profit before tax 219.9 191.3 15 Tax (38.4) (37.8) (2) Profit after tax 181.5 153.5 18 Profit attributable to non-controlling interests (2.9) (2.1) (38) Profit attributable to equity holders of the parent 178.6 151.4 18 Earnings pe
Slide 11: Consistent profit conversion and uses of cash
Financial results Cash flow • Operations generated cash flow of Cash flow (£m) (1) £214.3 million (1) 106% of adjusted EBITDA 214.3 22.1 120.7 (FY2017/18: 114%) 23.7 • Shares purchased to satisfy 24.0 4.9 6.6 10.8 463.1 employee equity awards (£23.7 426.8 million) • Net seed capital investments of
Slide 12: Conservative and consistent balance sheet structure
Financial results Balance sheet • Excess regulatory capital of £557.6 million Consistent balance sheet structure Capital resources of £678.6 million (2) 800 Pillar 2 regulatory capital requirement of 700 £121.0 million 600 500 Excess capital equivalent to 78p/share 400 300 200 • Balance sheet
Slide 13: Emerging Markets outlook
Emerging Markets outlook Cautious global macro backdrop Value in EM: external debt spread (bps) • Rising concerns over US and global growth 450 • Risk of continued US trade war with China/Europe 400 • Base case for US economy to deliver below-par growth but 350 market increasingly fearful of recessi
Slide 14: Summary
Summary • Strong operating and financial performance ˗ Active management delivers outperformance ˗ Strong growth in AuM and recurring net management fee income ˗ Adjusted EBITDA +10% and margin maintained at 66% ˗ Diluted EPS +18% and DPS 16.65p • Diverse range of Emerging Markets well-positioned fo
Slide 15: Appendices
Ashmore Appendices eee
Slide 16: Adjusted profits reconciliation
Appendix 1a Adjusted profits reconciliation Adjusted Adjusted FY2018/19 FY2017/18 £m £m YoY % Net revenue 314.3 276.3 14 FX translation (6.2) 2.0 nm Adjusted net revenue 308.1 278.3 11 Operating costs ex consolidated funds (107.7) (94.3) (12) VC on FX translation 1.4 (0.4) nm Adjusted operating cost
Slide 17: Seed capital
Appendix 1b Seed capital • Consolidated funds: FY2018/19 FY2017/18 £m £m Line-by-line consolidation in financial statements Gains/(losses) on investment securities 0.5 3.0 FX taken to reserves Change in third-party interests in consolidated 3.8 (2.4) PBT contribution of £6.5 million funds Oper
Slide 18: Net management and performance fees by theme
Appendix 2a Net management and performance fees by theme FY2018/19 FY2017/18 FY2018/19 FY2017/18 £m £m US$m US$m External debt 55.1 50.7 71.1 67.8 Local currency 54.2 46.6 70.2 62.7 Corporate debt 51.9 35.8 67.3 47.6 Blended debt 81.2 68.2 105.0 92.7 Equities 25.1 23.3 32.5 31.4 Alternatives 15.1 12
Slide 19: Management fee margins
Appendix 2b Management fee margins 131 129 FY2017/18 FY2018/19 81 76 77 74 59 56 49 48 49 49 46 44 42 39 17 16 Group External debt Local Corporate Blended debt Equities Alternatives Multi-asset Overlay currency debt Fixed income: 46bps (FY2017/18: 48bps) 19
Slide 20: Assets under management
Appendix 3a Assets under management AuM by theme (US$bn) AuM as invested (US$bn) 0.5 External debt 1.6 6.7 7.1 19.1 Local currency 1.7 4.4 4.5 External debt Corporate debt Local currency 36.2 Blended debt 15.8 Corporate debt 24.3 Equities Equities 19.7 Alternatives Alternatives Multi-asset Overlay/l
Slide 21: Investment themes
Appendix 3b Investment themes Overlay/ External Debt Local Currency Corporate Debt Equities Alternatives Liquidity (USD 19.1bn) (USD 19.7bn) (USD 15.5bn) (USD 4.4bn) (USD 1.6bn) (USD 6.7bn) Global Emerging • Broad • Bonds • Broad • Global EM Equity • Private Equity • Overlay Markets • Sovereign • Bo
Slide 22: Quarterly net flows
Appendix 3c Quarterly net flows +8.0 +6.0 +4.0 +2.0 US$ billion +0.0 -2.0 -4.0 -6.0 -8.0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 22
Slide 23: AuM movements by theme and fund classification
Appendix 4 AuM movements by theme and fund classification AuM Gross Gross Reclassification AuM US$bn 30 June 2018 Performance subscriptions redemptions Net flows & other 30 June 2019 External debt 14.5 1.9 4.1 (1.7) 2.4 0.3 19.1 Local currency 17.0 1.6 4.1 (1.8) 2.3 (1.2) 19.7 Corporate debt 9.8 0.9
Slide 24: Foreign exchange
Appendix 5 Foreign exchange • Sterling weakened against the US dollar over the year Currency exposure of cash(1) Period-end rate moved from 1.3200 to 1.2727 30 June 2019 % 30 June 2018 % £m £m Average rate 1.2958 vs 1.3464 in FY2017/18 US dollar 255.6 55 317.0 74 Sterling 157.8 34 77.2 18 • P&L
Slide 25: Cash flows and consolidated funds FY2018/19
Appendix 6 Cash flows and consolidated funds FY2018/19 £m As reported Consolidated funds Group ex funds Cash from operations 211.2 (3.1) 214.3 Taxation (22.1) - (22.1) Interest received 15.4 8.8 6.6 Seeding activities (22.2) 1.8 (24.0) Acquisition (4.9) - (4.9) Dividends paid (120.7) - (120.7) Treas
Slide 26: Investment performance
Appendix 7 Investment performance 1yr 3yr 5yr 30th June 2019 Ashmore Benchmark Ashmore Benchmark Ashmore Benchmark External debt Broad 14.6% 12.4% 7.6% 5.5% 6.4% 5.3% Sovereign 14.4% 12.4% 6.5% 5.5% 6.2% 5.3% Sovereign IG 12.9% 12.4% 5.5% 4.7% 5.2% 4.9% Local currency Bonds 10.2% 9.0% 5.7% 4.2% 0.6%
Slide 27: Historical valuations relative to Developed Markets
Appendix 8 Historical valuations relative to Developed Markets External debt Local currency Index: 73 countries, 169 issuers, 741 bonds Index: 19 countries, 19 issuers, 220 bonds 8.0% 6.00% 550 7.0% 5.50% 500 6.0% 450 5.00% 5.0% Yield (%) 400 4.0% 4.50% 350 3.0% 4.00% 300 2.0% 3.50% 250 1.0% 200 0.0
Slide 28: Disclosures
Appendix 9 Disclosures Page 4: - Gross performance is shown, weighted by fund AuM, to provide a representative view to analysts and shareholders of Ashmore’s investment performance over relevant time periods - Only funds at 30 June 32019 and with a performance benchmark are included, which specifica
Slide 29: Disclaimer
Disclaimer IMPORTANT INFORMATION This document does not constitute an offer to sell or an invitation to buy shares in Ashmore Group plc or any other invitation or inducement to engage in investment activities. Certain statements, beliefs and opinions in this document are forward-looking, which refle